Rebuilding your credit after declaring bankruptcy in Colorado

After filing for bankruptcy, filers may be able to significantly improve their credit score by following a few specific steps.

Many people in Colorado and throughout the rest of the country file for bankruptcy every year. According to The Huffington Post, over 1 million people and businesses in the U.S. filed for bankruptcy in 2013. Although bankruptcy is a common occurrence, many struggle to rebuild their credit score at the conclusion of the process.

Bankruptcy's impact on credit

How much a person's credit score is impacted by the bankruptcy process depends on what his or her credit score was like before he or she filed. For example, The Huffington Post states that a person who started the bankruptcy process with a credit score of 760 may find that his or her rating drops to 540 or 560. Comparatively, a person who filed for bankruptcy with an original credit score of 680 may find that his or her score drops anywhere from 150 to 180 points.

Steps to follow

At the conclusion of the Chapter 13 or Chapter 7 bankruptcy process, filers may be anxious to elevate their credit score as quickly as possible. To accomplish this, CBS News suggests that filers should:

  • Obtain a copy of their credit report - those who recently filed bankruptcy should collect a copy of their credit report from the three major credit reporting agencies, TransUnion, Experian and Equifax. Then, they should review it to make sure that there are not any errors on it.
  • Submit an explanatory statement - After reviewing their credit report, filers should provide the three credit reporting agencies with a 30-word statement that explains their financial difficulties. Until filers request that this statement be removed from their credit report, it will remain on it.
  • Apply for a new credit card - those who recently filed for bankruptcy may want to acquire a secured credit card. Then, filers should use this card to purchase items they can immediately pay off in full and make sure that they do this before any interest accrues on their account.

In addition to these steps, those who filed for bankruptcy should keep in mind that their credit score will not improve overnight. Although they may be able to dramatically improve their credit rating after declaring consumer bankruptcy, this process takes continual dedication and effort.

Consult with an attorney

A damaged credit score is just one of the many financial repercussions bankruptcy filers in Colorado face after completing the filing process. If you are concerned about how the bankruptcy process will affect your individual situation, reach out to an attorney in your area to discuss the specifics of your case.

Keywords: bankruptcy, credit score, Chapter 7, Chapter 13